How has confinement afected Barcelona rental market?

I remember few calls from owners who, at the last April beginning, wanted to know our opinion on the evolution of the rental market, and after warning them that we did not have a magic ball, we gave a modest opinion, telling them that we would first have to differentiate the rental housing market from the market for other uses of housing (premises, offices, warehouses..., ). We will talk about the rental market of premises, offices or industrial buildings in future articles. Today we will focus on the rental housing market in Barcelona.

During the calls (we were already confined) that we received from clients or friends of clients we told them with all modesty, that once the confinement was overcomed, the demand rates would return with a certain speed to normalize since Barcelona is a place with a deficit of housing to rent, and this will last a long time yet (this situation is structural).

And so it has happened: in April (half April was operational) we were able to return to activity and we found an unsatisfied demand exchange that was looking for and visiting rental apartments, last May signed contracts achieved 75% of the contracts signed for the same month of 2019. Already in June we achieved 85% of the volume of operations of the same month of the previous year. And at the end of July, just before we went on vacation, we had equalled and exceeded (Barcelona and Sant Cugat respectively) the volumes of July 2019.

Will the new Law 11/2020 lower the rental price?

When we returned from holidays, the pace was the same, in August the same number of rental contracts were signed as in August 2019, having left a good number of contracts pending to be signed at the beginning of September due to vacation issues of the future tenants.

Our September looked bright, the demand rates were very vigorous, until mid-September when the media echoed the announcement of the entry into force of Law 11/2020 on rent stop in specific tensionated areas . This echo to the media caused a slowdown in the rate of requests for new visits to available housing, until the final publication on September 21 and with it the corresponding opinion columns in favor and against it depending on the affected part (tenant or owner/real estate professionals). The month ended with a slightly lower number of rental operations (signed contracts) compared to the same month of the previous year. October started with the same trajectory, but as the month progressed, and rents did not decrease, the rates of information requests and visits increased. We finished that month with less operations signed than in the homonymous month of the year 19, but with a significant number of contracts pending signature for the month of November that we finished these days. And indeed, in November we are back at the level of November 19 and with a clear trend of increasing demand.

And what about the tourist apartments?

Well, a good part of them - all furnished and equipped - have joined the housing rental market, but with the modality of seasonal rental with offers ranging from 1 to 18 months most of them. And here we have noticed a drop in the price of rentals to areas where there is an abundance of this type of housing: Raval, Gothic, Borne, Ciutat Vella, Poble Sec Sur, Barceloneta and certain areas of the Eixample Derecho. In our opinion, once again it is the market law, it is a key factor to influence downwards the rental prices in the mentioned areas, due to the excess of supply of furnished apartments, the scarcity of demand - due to the COVID situation - of this type of housing (populated by: tourists, students, foreign workers) and the need of the owners of this typology to make a profit.

And how are the rental prices of housing for regular and permanent housing?

Well, so far the law is failing in stop prices, we can't forget that prices INDEXED by the law are estblished by rental contracts signed in recent years, and in recent years, rental prices have remained in a clearly upward cycle (lots of demand and little supply as we said at the beginning).

Incentives, rewarding the fact of putting housing for rent are the solution

If we want the prices of housing rentals (regular and permanent housing, NOT temporary), is contained, we need to increase their supply, with policies to promote rental housing in the public park, for first-time home seekers, and with incentives for the promotion of housing for rent to the private initiative, and encouraging the small owner (1 or 2 apartments) to use them for renting with a more or less favorable tax treatment depending on the price they ask, the duration they offer and to whom they are destined. Last but not least, it should be remembered that 85% of the apartments for rent in Barcelona are owned by small owners who saved and made an effort to maintain the property ownership in order to use it as a complement to the retirement pension.